Q14

please show all work, provided a chart if it is neccasary

There are two bonds in the market, Bond X and Bond Y. Both of them have a face value of $4000, and annual coupon of $400. However, Bond X takes 3 years to maturity and Bond Y take 4 years to maturity. a) Suppose YTM is 4%, what are the bond prices for them? (9 pts) b) Suppose YTM is 8%, what are the bond prices? Which bond has a higher interest rate risk? (10 pts) Calculation-based Questions *** Show your work *** PVIFA Table Periods 1% 2% 3% 4% 5% 6% 1 0.9709 0.9524 0.9434 2 N 0.9901 0.9804 1.9704 1.9416 2.941 2.8839 3.902 3.8077 11.2551 10.5753 21.2434 18.9139 30.1075 25.4888 1.9135 2.8286 3.7171 9.954 16.9355 4 0.9615 1.8861 2.7751 3.6299 9.3851 15.247 18.9083 1.8594 2.7232 3.546 8.8633 1.8334 2.673 3.4651 8.3838 12 24 13.7986 12.5504 14.621 36 21.8323 16.5469